On Monday afternoon, CFTC chairman Michael Selig shared the agency’s stance on perpetual contracts that are now federally regulated and available on platforms including Kalshi. Listing misconceptions as “myths,” the former defense attorney posted several clarifications on X that relate to perpetual futures markets (perps).
The posts, according to Selig, are a way to “correct the record” in light of the agency’s approval of “perps” contracts, which – contrary to traditional markets – do not have a fixed end date. The perpetual markets are popular with many traders (many of whom use a VPN from the United States to access the offshore Hyperliquid platform), but can result in digital asset “cascading” if the maximum leverage allowance is relatively too tolerant.
Below, our readers can reference the individual posts that were made by Selig on Monday. Each subtopic listed represents one of the posts contained within the X thread.
Chairman Mike Selig states that the Commodity Exchange Act does not limit the definition of a “futures contract” to mean only trades that have a fixed expiry date. The current CFTC regulations don’t limit this definition either.
Instead, “futures contract” can define a broad range of markets, including those that do not have a set date of delivery (such as perpetual futures). Selig’s explanation is contrary to the “myth” that has spread concerning what a “futures contract” actually is, according to existing CFTC regulations along with language contained within the CEA of 1936.
Although some offshore exchanges might allow leverage on perps to go as high as 250 times the collateral stake amount, most of the CFTC-regulated perpetual contracts are capped at 10x leverage. This leverage limit may be a bit higher for some S&P 500 and crypto markets, but the leverage restrictions are established and monitored by the CFTC, which collaborates with its regulated clearing houses.
Selig’s response on this topic is related to speculation that has been posted surrounding Kalshi’s BTCPERP contract. Those who purchase the long or short side of swaps on the prediction exchange won’t be able to come anywhere near the leverage multiplier that offshore brokerages allow.
Some critics of perpetual markets are claiming that the federal agency did not warn interested parties about the potential regulation of “perps” contracts, or that the CFTC never accepted public feedback on the issue. This is not true, said Selig on Monday.
A quick check shows that, while the relevant files are no longer viewable through a URL, they can be downloaded and viewed by accessing an official CFTC portal.
VIEW: CFTC Request for Public Comment on “Perps” (2025 downloadable file)
A follow-up Google search shows a similar file, containing the entirety of the public comments from 2025, available for download from the CFTC website.
Since a trader can theoretically hold a perpetual contract position forever, there are no fixed expiration dates on contracts such as BTCPERP. This allows traders to “ride out” a position, instead of being forced to sell the contract once it expires and then rebuy if they wish to continue.
Just like the funding mechanisms that are required to hold a perpetual contract, fixed-expiration markets likewise result in charged fees each time the trader is forced to rebuy the position. Either way, there is a cost incurred by the trader; the difference is the timing (within a contract’s life cycle) at which the individual experiences these costs.
Most of the replies to Selig’s X thread on Monday were in reference to the offshore exchange Hyperliquid – the offshore platform that many believe had so much success with its own perpetual contracts offering that the CFTC decided to regulate the markets for licensed operators.
Another point of feedback from one user requested that the chairman include a specific date on the videos that were uploaded as part of the thread. The four segments, while informative, were undated and may have required some viewers to use headphones due to the low volume of the source material.
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